Dec 29, 2013

Straight to Video: Revenue Beyond Theatrical

We're making a horror movie here. We have no illusions about it - straight to video is a possibility. It could well help our chances to eschew a theatrical into a video release and look at deliberately seeking the DVD, the BluRay, the Video on Demand (VOD) route. If we can market it well enough in the various territories we release in, our lower demands with distribution may help us through the door.

A few years back, when the film school AFTRS was still in Melbourne, they held an event I was lucky enough to attend. The distro and marketing people from Paramount, Madman and I think Fox told us about a film they'd just released and a film they planned on releasing. They went into the detail of the marketing plan and spend, followed by their expectations and how/why they were/n't met. It was incredibly valuable information. Unfortunately, a lot of the audience was clearly made up of auteurs and precious people who despised the idea of money and marketing involved in filmmaking, but it did mean those of us who were serious about the business got some quality time.

The Vice President in charge of Distribution from Paramount Australia said some stuff I always remember. First, when asked what he wanted from directors, he said there was one thing he wished to hear but seldom did. He wanted a director to say, "I would like this film to make money." Second thing was outlining the types of films that sell. It was an unexpected but enlightening answer. Allow me to paraphrase.
"There are four types of films.
  1. A bad film that's hard to market;
  2. A great film that's hard to market;
  3. A bad film that's easy to market;
  4. A great film that's easy to market.
"I can sell three of those films. A bad film hard to market, well, no, that's difficult and should be abandoned. A great film that's easy to market, well, that's gold and will do well for everyone involved, but is exceedingly rare. I'll still buy a great film that's hard to market, because we'll believe in the project and the pathway will consist of critical and award recognition. The bad film that's easy to market, too, is just as desirable, because it may not be Oscar or Golden Globe worthy, but lots of people will watch it and buy it. It can still make money."
I came away from this session realising the power of genre and comedy. There are plenty of movies we love that are not critically acclaimed, but sit proudly in our DVD collections. A bad film that's easy to market is a genre film, a straight to DVD action movie, a gross out comedy. Hard Target, Universal Soldier, Hellraiser, Super Troopers, Definitely Maybe, Fools Rush In.

Now I needed data. Website The Numbers is a collection of box office and video data based out of LA. Pay enough money and you can get custom research. Sign up and you get access to a certain amount of information, searchable over decades, with at least domestic and international theatrical box office and production budgets available. In some films, there's information on domestic and international video sales. You get a month of free time when you first sign up, before you have to pay. I signed up and raided every type of dataset I could think of that might help me.

Setting the low bar I keep for realism, I went to the bottom 300 horror films the site had information on. There's a few bits and pieces I collected that will help us sell our concept in a business plan, but here's some good juice.
DVD Sales in the US among the 300 lowest performing horror films:
Minimum Average (bottom 100) $3.4 million made.
Mid-Range Average (all 300) $5.37 million made.
Highest Average (bottom 200) $7 million made.
The lowest average gives us $3.4 million. There are films that did far worse, and films like Paranormal Activity with tiny budgets and huge results. $3.4 million, compared to a budget of $250 thousand, is an impressive enough return for a first feature.

I also emailed Madman, asking them a few questions. Again, this was towards the end of the year, so I got a few quick answers with the promise of more detail in 2014. I was given the thumbs up for interest in straight to DVD and closing the gap on release windows, which I think is useful because it lets us put all our marketing effort into one concentrated period, and reap maximum return from multiple channels.

Finally, as I put this information together and built the case for placing less emphasis on theatrical release, this essay came out: 
Not at a Cinema Near You: Australia's Film Distribution Problem
"Only one in ten first-release films are now viewed at the cinema. 65% are viewed on video-on-demand and DVD/Blu-Ray. Audience behaviour is changing."
Not only is moving away from theatre (even though a DVD will enjoy a perception boost from a theatre release) something that economically makes sense, it's where the audience is shifting. Straight to DVD doesn't mean sucky, and with all the money and time that goes into theatrical, with such a shrinking payoff, video is clearly the future.

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